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Monday, 14 February 2011

Where next for the cash cows?

We've had a week of speculation since figure for the likes of Newsquest and Northcliffe were released - both showing what we all knew really.

In summary, newspapers are still making quite a lot of money.

However, is has been the way for years, the profit margin is the issue for men in nice suits sitting in head offices up and down the land.

Among the latest to talk shit about the industry was a chap from Northcliffe, a man so nondescript I can't even remember his name.

Anyway, he said consolidation was needed in the industry, despite the fact that consolidation has been rampant in newspapers for years and look where it's got us.

He told Press Gazette: "Our attitude is we think it [consolidation] is worthwhile and a good thing for the industry because it will create bigger businesses who are more able to make the transition to the brave new world.

"There’s obviously going to be a further transition…We are not going to be the consolidator. We are not going to be acquiring other regional newspapers companies to consolidate with Northcliffe.

"I think we have other opportunities in the group for investment. But we are very content to go on operating Northcliffe, it makes good cash flow and so on."

Okay, so let's actually tell it like it is, shall we? Northcliffe thinks consolidation is needed, but won't be consolidating.

Does anyone else smell a 'come and get me' plea?

No wonder he thinks consolidation is needed when clearly Northcliffe would be hugely interested in getting rid of a cash cow that is struggling to produce milk in the quantities of years ago.

Let's not forget, it was Northcliffe who was for sale only a few years ago, only not sold.

So don't patronise us.

Meanwhile, in newsrooms up and down the country, we are being told of the continued squeeze on 'revenues' and the need to make cuts, take furlough leave and such like.

However, in among the headlines of Northcliffe effectively being up for sale, and the drop in 'revenues', it seems to have been missed that Northcliffe's operating profit last year increased - yes, increased - by 24% to £30 million.

That is on revenue down 10% year on year.

So just how hard is it out there? Being complete arses has earned Northcliffe £30 million, an increase.

Now I realise £20 million is a tiny sum of money, but why not just make that much profit in what is widely regarded as the worst recession we've seen, and keep a few of the jobs you've not replaced, or pay those who remain a little bit more?

I know, it's a crazy thought...

But the reality is that the newspaper industry has been a cash cow for a long time, and we - as well as out papers - are simply being milked for all we are worth until profits drop to, oh, I don't know, £10 million? Then we'll be sold off for pennies to another group who will do more of the same.

Depressing, I know, and if anyone can give me an alternative view of the future, I'd love to hear from you.